Retro is in. Whether art deco architecture, 60’s pop music, vintage clothing, dial phones or classic rock, what once was old school is now in vogue again. Not all styles and practices of the past are right for resuscitation. Take strategy or, more to the point, “strategic planning.”
Life Moves On, But Not For Everyone
It’s no surprise that the principles and practices of business and the economy change over time. Industries rise and fall. Technology transforms how business and society function. Political and regulatory environments change. Globalization, specialization and demographics evolve.
But, surprisingly, companies still use the processes, constructs and vocabulary of strategy developed for another time. Before the 1960s, business strategy really didn’t exist (for a good history of how strategy developed over the past half-century, read Lords of Strategy by Walter Kiechel). Only when academics and consultants started noticing that some companies were more productive than others did the idea of strategic advantage become notable.
But strategy is an evolving process. Through the 1970s and 80s, changes in technology, regulation, economics, industry, and beginnings of globalization induced strategic concepts to evolve. What worked in one industry didn’t necessarily work in another. And what worked a few years before no longer fully applied.
Granted, the concepts developed were innovative and applicable — to the companies and markets for which they were developed. Yet, it became the lifeblood of academics and consultants to constantly seek new angles on business productivity and competitiveness. The focus of strategy spanned the experience curve, competitive advantage, emergent strategy, people center strategy, positioning, game theory . . . and so on. Each advance was memorialized in a book, journal article, white paper, seminar, curriculum offering or retainer consulting engagement.
Like Generals “Always Fighting the Last War”
Fast forward to 2000, when the US economy turned on its head. The dot-com bust broke many companies, but didn’t stop the advance of technologies in analytics, data storage, communication and interaction. Business was moving faster than ever before, and we entered the VUCA (volatile, uncertain, complex and ambiguous) age.
But look at many strategies (or strategic “plans”) since then and you’ll see a relic of the past: the five-year roadmap with pro forma financials and elaborate assumptions about the future on which the fortunes of the company rest. When faced with, “We need a new strategic plan,” executives turned to the voluminous strategy literature of the last part of the 20th century. They proceed, disregarding that these practices and templates were developed mostly for large, global, public companies in product-centric industries.
Just because something was popular once, it may no longer be appropriate. There is nothing wrong with LP records; we just have found better ways to listen to music.
But some things are just wrong. Without debating the role of guns in society, most would agree that, at a time when the US faces a mass shooting averaging almost every day, glorifying the use of an assault rifle as a children’s toy is not a good idea.
Retro is fine as long as it is appropriate. There are many elements of 1980s strategy formation and implementation that can be a productive part of a 2020 strategy. We just need to consciously create a strategy process that meets the needs and circumstances of our emerging situation.
So How Do We Formulate a “Modern” Strategy?
Details are best left to other articles, but the first step is to recognize that the world of predictable and slow businesses is largely gone for most industries. Second, strategy and planning are fundamentally different concepts. Strategy addresses what you can’t control (e.g., revenue profile, competitor behavior); planning addresses what you can (e.g., headcount, facility expense).
Third, strategy encompasses a broad set of competencies and activities, extending from diagnostics to evaluation. Don’t get trapped by the “good strategy, bad execution” excuse. If you don’t have the talent, budget or management systems to execute a strategy, then a failed execution means the strategy design itself was flawed.
Finally, be sure your strategy process includes elements that address each of the four essential business questions:
- Who are we? (diagnostics that address finance, enterprise value, agility, risk, quality and culture)
- Where are we going? (strategy cascade that integrates aspirations, target markets and products, competitive tactics, organizational capabilities and management systems)
- How do we get there? (validated suite of current and alternative business models and industry/macro evaluation)
- How will we know? (performance management, evaluation and decision support systems to advise chaos in actions and strategy)
This doesn’t mean you can’t use components of strategy from the books on your shelf, what you dig up on the Internet or from what worked for you a decade or more ago. Just make sure that they are suited for business as it is and is becoming, not as it was when wide lapels and bell bottoms were in style.